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Fifth of U.S. Grant Makers Pay Their Board Members, Study Finds

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Some 22% of U.S. grant-making foundations compensate their board members, an activity that’s legal within certain strict parameters, according to new data from The Council on Foundations.

The council’s 2014 Grantmakers Salary and Benefits survey of more than 1,000 community, corporate, private, operating and public foundations found that these organizations paid a median $71,438 for all board members.

Among foundations that paid board members, compensation ranged from a median $209,500 for grant makers with between $1 billion and $2 billion in assets to a median $7,500 for those with less than $5 million in assets.

About 61% of organizations that compensated board members paid both the chair and others on the board, 34% paid only board members and 5% only the board chair.

Following are median compensation levels by types of grant-making foundations:

  • Public foundations: $198,100
  • Independent foundations: $86,125
  • Operating foundations: $69,775
  • Family foundations: $35,750
  • Corporate foundations: $26,925

Community foundations and those characterized as “other” did not compensate board members.

The survey found that foundations in the West were most generous to board members, paying a median $109,000, followed by those in the South, $84,500; the Midwest, $72,500; and the Northeast, $45,000.

Be Reasonable

The report recommended that foundations inclined to compensate board members keep several things in mind.

It noted that although payment of reasonable fees was lawful, paying excessive or unreasonable amounts violated federal and state law. It could prompt the IRS to impose excise taxes against participating board members.

The council said foundations should ask themselves whether they can attract qualified people to serve on their board at the current compensation rate (possibly zero) or at another level of compensation.

As to what’s reasonable, the council said no single formula to determine this existed, given the diversity of foundations in asset size, spending level, program complexity and varying time demands required of board members. “What is reasonable will depend on the facts and circumstances in each case,” the report said.

Reasonable compensation has become a current news topic. The Chronicle of Philanthropy recently reported that the National Committee for Responsive Philanthropy had asked Minnesota’s attorney general to investigate why two trustees of the Bremer Foundation had received 1,000% pay increases over nine years.

Check out Less Affluent Americans Boost Charity; Wealthy Donors Tighten Belts on ThinkAdvisor.